- If your insurance company covers accident-related expenses and later discovers that another party was responsible for the crash, they may seek reimbursement, a process known as insurance subrogation.
- Not every company pursuing subrogation from your settlement may be entitled to it. Paying an unenforceable subrogation claim can result in substantial costs.
- A personal injury attorney can help identify eligible parties for subrogation, ensuring you only pay what is necessary.
After a car accident, you may incur bills and expenses related to medical care and the accident itself. In some cases, your auto or medical insurance providers may cover these expenses, such as medical bills, car repairs, or property damage resulting from the accident. However, because the responsible party (or their insurance carrier) should be the one covering these costs, your insurance provider may seek reimbursement for any previously paid expenses. This is referred to as insurance subrogation.
Discovering that your insurance provider is pursuing subrogation can be concerning, and you likely have many questions. Here’s what you need to know about subrogation and its potential impact on your auto insurance claim or reimbursement.
How Insurance Subrogation Works
When an insurance carrier seeks subrogation, it typically means that another party has been found partially or entirely at fault for the accident. The subrogation process allows the insurance carrier to recover expenses it should not be responsible for.
Here’s a common scenario: Suppose you were injured in a car accident and sought medical treatment at a hospital or from a doctor. Before receiving treatment, you provided your medical insurance information, just as you would for any regular medical care. The medical facility then submitted your bills to your insurance provider, which made payments in accordance with your policy.
However, if it’s later determined that another driver was at fault for the accident, and you receive a settlement for your claim, your insurance provider may seek reimbursement for the costs it previously covered for your accident-related injuries.
The underlying principle of subrogation is that your insurance provider should not bear the financial burden for expenses caused by another driver. Nor should you receive compensation twice: once when your insurance covers your care and again when you receive reimbursement for medical expenses from an accident claim.
How Does Fault Impact the Subrogation Process?
Some states follow the concept of “comparative negligence,” allowing you to recover damages from an accident even if you were 99% at fault. However, Georgia adheres to the law of “modified comparative fault.”
As per Georgia code O.C.G.A. §51-12-33, you can seek damages if you were partially at fault, provided you were not more than 50% responsible for the accident. For instance, if you were rear-ended, but your brake lights were not functioning, and the other driver claims they couldn’t see you stopping, you might be considered partially at fault. While the other driver may bear most of the blame, your contribution may be acknowledged.
If you are found partially at fault in a Georgia accident, the amount you can recover will be reduced by the percentage of fault assigned to you. For example, if you are found 30% responsible, your recovery may be reduced by 30%, meaning you can only recover 70% of your damages.
This analysis is crucial in the subrogation process because it necessitates assessing each driver’s responsibility for the accident before determining the amount each insurance carrier must pay for an injured party’s damages. This determination can impact the insurance company’s subrogation claim against you.
Under Georgia law, specifically O.C.G.A. §33-24-56.1, certain insurance policies only permit an insurance company to recover money spent on your medical bills if you have been “made whole.” This means that the compensation you receive from your claim must exceed the total of your damages, encompassing both economic (medical expenses, lost wages) and non-economic (pain and suffering) losses stemming from the accident. You are considered “whole” only when you’ve been compensated for all your losses. If you don’t recover the full extent of your damages, the insurance company is unlikely to recover what it paid for the claim.
The rationale behind this law is that in situations where either the insurer or the insured may have to bear unpaid expenses, the loss should fall on the insurer because they’ve already received a premium for assuming this risk. Furthermore, the insurance company would have been obliged to cover the insured’s medical expenses regardless of whether the insured was negligent or if a third party was found liable for the accident.
Insurance claims can become more complex when the Employee Retirement Income Security Act (ERISA) of 1974 is involved. While insurance companies typically cannot recover when the settlement amount is less than your damages and you haven’t been “made whole,” insurance policies governed by ERISA often don’t adhere to this rule.
In general, if a policy qualifies as a legitimate ERISA plan, the insurance company has the right to subrogate most or all of the benefits it paid out. ERISA plans enjoy these enhanced subrogation rights because they are “self-funded,” meaning they are entirely funded by the premiums paid by members (employees) contributing to it. Conversely, general insurance policies offered to the public, often through employers, can more easily absorb losses since they are funded by premiums from individuals across the state or country.
This means that ERISA plans can claim a larger portion of your settlement. However, many insurance companies may demand reimbursements under ERISA policies even when they are not entitled to them. When dealing with an ERISA plan, it is essential to engage an experienced personal injury attorney who can explain your rights and advocate on your behalf.
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Do All Accident Claims Involve Subrogation?
Whether insurance subrogation applies to your accident claim depends on who paid the bills and whether they have the right to seek reimbursement. It’s crucial to understand that not every company seeking subrogation from your settlement is entitled to it. Paying an unenforceable subrogation claim can result in significant costs.
However, if your insurer has a valid subrogation claim for expenses incurred due to someone else’s negligence, you may be obligated to repay your carrier from your settlement.
Unfortunately, reimbursement demands may not surface until after your claim has been settled. This means that the compensation you receive from your claim may not account for the subrogation cost, potentially reducing the amount you ultimately retain.